Fulcrum Therapeutics Inc. (NASDAQ: FULC) saw its stock plunge 65% on Thursday after announcing that its late-stage trial for losmapimod, a treatment for facioscapulohumeral muscular dystrophy (FSHD), failed to meet its primary endpoint.
This significant setback has led the biotech company to halt further development of the drug for FSHD, causing its stock to nosedive.
The Phase 3 trial, which involved 260 patients over 48 weeks, not only missed its primary goal but also failed to achieve statistical significance on secondary endpoints.
As a result, Fulcrum Therapeutics has decided to discontinue its losmapimod program for FSHD, a rare genetic disorder that causes muscle weakness in the face, shoulders, and arms.
Currently, no approved treatments exist for FSHD, which affects an estimated 4 in every 100,000 people.
Shares of Fulcrum Therapeutics are now down nearly 75% from their year-to-date high in March.
The company faces significant challenges moving forward as it seeks to recover from this major clinical trial failure.
What’s next for Fulcrum Therapeutics stock?
Despite this setback, Fulcrum Therapeutics plans to shift its focus to other therapeutic areas.
The company will use its $274 million in cash, cash equivalents, and marketable securities to pursue new treatments for Diamond-Blackfan Anemia (DBA) and advance pociredir for sickle cell disease (SCD), according to a press release issued on Thursday.
CEO Alex Sapir expressed disappointment in the failure of the REACH trial but reiterated the company’s commitment to exploring other therapeutic options.
The trial’s failure is a major blow for the firm, which has seen its stock steadily decline in recent months, partly due to its lack of a dividend yield to attract income-focused investors.
Wall Street was bullish on FULC ahead of today’s update
Before the trial results were released, Wall Street had maintained a relatively optimistic view of Fulcrum Therapeutics.
Analysts at Bank of America Securities recently upgraded the stock to “neutral,” raising their price target to $10 in anticipation of a positive outcome from the FSHD trial.
However, they had also cautioned that clinical trials are inherently unpredictable.
RBC analysts were even more bullish, setting a $15 price target, which represented a potential 100% upside for the stock.
With the trial results now in, it remains to be seen how these firms will adjust their outlook on Fulcrum Therapeutics.
In August, Fulcrum reported second-quarter earnings that exceeded Wall Street expectations, swinging to a net income of $55.4 million from a loss of $23.8 million in the same period in 2022.
The company had projected a 35% annual revenue growth over the next three years.
However, following the REACH trial failure, Fulcrum will likely need to revise its guidance.
The future for Fulcrum Therapeutics hinges on its ability to advance its pipeline in other areas, as investors await further developments following this major clinical setback.
The post Fulcrum Therapeutics stock tanks after Phase 3 trial failure of muscular dystrophy drug appeared first on Invezz